Farfetch Limited revenue surged on 63.9% and EBITDA Margin increased on 2.8 pp from -26.9% to -24.1%
02/25/2021 • About Farfetch Limited (
$FTCH) • By InTwits
Farfetch Limited reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Farfetch Limited is a fast growth stock: FY2020 revenue growth was 63.9%, 5 year revenue CAGR was 63.7% at FY2020 ROIC -125%
- The company operates at negative EBITDA Margin: -24.1%
- Farfetch Limited spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -25.3%
- Farfetch Limited has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's a lot of higher than industry average of 26.8%.
- CAPEX is quite volatile: $27m in FY2020, $40m in FY2019, $21m in FY2018, $13m in FY2017, $6m in FY2016
- The company has unprofitable business model: ROIC is -124.7%
- It operates with high leverage: Net Debt/EBITDA is 6.2x while industry average is 52.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Farfetch Limited's Revenue jumped on 63.9%. Revenue growth showed slowdown in FY20Q4 - it was 41.3% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.8 pp from -26.9% to -24.1% in FY2020.
Gross Margin increased slightly on 1.0 pp from 45.0% to 46.1% in FY2020. SG&A as a % of Revenue jumped on 25.5 pp from 42.2% to 67.8% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 42.2%.
Net Income margin dropped on 162 pp from -37.7% to -200% in FY2020. During the last 5 years Net Income margin topped in FY2018 at -25.8% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 Farfetch Limited had CAPEX/Revenue of 1.6%. The company's CAPEX/Revenue decreased slightly on 1.7 pp from 3.3% in FY2017 to 1.6% in FY2020. For the last three years the average CAPEX/Revenue was 3.0%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2019 at 3.9%.
Leverage (Debt)
Debt level is 6.2x Net Debt / EBITDA and Debt / EBITDA. Debt jumped on 593% while cash jumped on 388%.
Farfetch Limited has no short term refinancing risk: cash is higher than short term debt (6,022.0%).
Management team
Farfetch Limited's CEO is Jose Neves. Jose Neves has 13 years tenure with the company. Farfetch Limited's CFO Elliot Jordan has spent 6 years with the company.
Financial and operational results
Farfetch Limited ($FTCH) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 242 | 386 | 602 | 1,021 | 1,674 | 63.9% |
| Gross Profit | 117 | 205 | 298 | 460 | 771 | 67.6% |
| SG&A | 162 | 230 | 314 | 431 | 1,134 | 163.2% |
| EBITDA | -82 | -84 | -150 | -274 | -403 | |
| Net Income | -81 | -112 | -156 | -385 | -3,351 | |
Balance Sheet
|
|---|
| Cash | 150 | 384 | 1,045 | 322 | 1,573 | 388.0% |
| Short Term Debt | 3 | 0 | 0 | 18 | 26 | 41.3% |
| Long Term Debt | 17 | 0 | 0 | 101 | 801 | 693.9% |
Cash flow
|
|---|
| Capex | 6 | 13 | 21 | 40 | 27 | -32.1% |
Ratios
|
|---|
| Revenue growth | 70.1% | 59.4% | 56.1% | 69.5% | 63.9% | |
| EBITDA growth | 50.4% | 2.1% | 79.3% | 83.2% | 46.7% | |
|
|---|
| Gross Margin | 48.3% | 53.1% | 49.5% | 45.0% | 46.1% | 1.0% |
| EBITDA Margin | -33.8% | -21.6% | -24.9% | -26.9% | -24.1% | 2.8% |
| SG&A, % of revenue | 66.7% | 59.6% | 52.1% | 42.2% | 67.8% | 25.5% |
| Net Income Margin | -33.6% | -29.1% | -25.8% | -37.7% | -200.2% | -162.4% |
| CAPEX, % of revenue | 2.5% | 3.3% | 3.5% | 3.9% | 1.6% | -2.3% |
|
|---|
| ROIC | | -35.3% | -22.7% | -27.7% | -124.7% | -97.0% |
| ROE | | -43.5% | -20.4% | -33.6% | | |
Farfetch Limited ($FTCH) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 331 | 365 | 438 | 540 | | 90.4% | 74.3% | 71.3% | 41.3% |
| EBITDA | 9 | -316 | 69 | -165 | | - | - | - | - |
| Net Income | -82 | -440 | -544 | -2,285 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 422 | 802 | 757 | 1,573 | | -46.9% | 18.1% | 137.7% | 388.0% |
| Short Term Debt | 19 | 20 | 22 | 26 | | 27.4% | -45.7% | 20.9% | 41.3% |
| Long Term Debt | 274 | 590 | 599 | 801 | | 242.0% | 654.5% | 625.9% | 693.9% |
Ratios
|
|---|
| Gross Margin | 46.3% | 43.7% | 47.8% | 46.1% | | -1.6% | 2.9% | 2.7% | 0.0% |
| EBITDA Margin | 2.7% | -86.6% | 15.8% | -30.5% | | 43.8% | -47.6% | 33.4% | -10.5% |
| Net Income Margin | -24.8% | -120.6% | -124.4% | -423.0% | | 38.0% | -77.7% | -89.0% | -392.4% |
Peers in Internet & Direct Marketing Retail
Below we provide Farfetch Limited benchmarking against other companies in Internet & Direct Marketing Retail industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cango Inc. ($CANG) | - | 142.3% | 3.7% | 31.9% | 42.5% |
| Amazon.com, Inc. ($AMZN) | - | 30.8% | 30.9% | 20.5% | 37.6% |
| Stitch Fix, Inc. ($SFIX) | - | 33.8% | 25.5% | 28.6% | 8.5% |
| Booking Holdings Inc. ($BKNG) | - | 18.0% | 14.6% | 3.7% | -54.9% |
| |
|---|
| Median (4 companies) | - | 32.3% | 20.0% | 24.5% | 23.1% |
|---|
| Farfetch Limited ($FTCH) | - | 59.4% | 56.1% | 69.5% | 63.9% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cango Inc. ($CANG) | 60.8% | 63.3% | 60.2% | 62.6% | 46.5% |
| Stitch Fix, Inc. ($SFIX) | 44.3% | 44.5% | 43.7% | 44.6% | 44.1% |
| Amazon.com, Inc. ($AMZN) | 35.1% | 37.1% | 40.2% | 41.0% | 39.6% |
| |
|---|
| Median (3 companies) | 52.6% | 53.9% | 43.7% | 44.6% | 44.1% |
|---|
| Farfetch Limited ($FTCH) | 48.3% | 53.1% | 49.5% | 45.0% | 46.1% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Amazon.com, Inc. ($AMZN) | 9.0% | 8.8% | 11.9% | 14.3% | 13.8% |
| Booking Holdings Inc. ($BKNG) | 29.9% | 38.6% | 39.7% | 39.8% | 0.3% |
| Stitch Fix, Inc. ($SFIX) | 9.3% | 4.0% | 4.4% | 2.4% | -1.7% |
| |
|---|
| Median (3 companies) | 19.6% | 23.7% | 11.9% | 18.7% | 0.3% |
|---|
| Farfetch Limited ($FTCH) | -33.8% | -21.6% | -24.9% | -26.9% | -24.1% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Amazon.com, Inc. ($AMZN) | 5.7% | 6.7% | 5.8% | 6.0% | 10.4% |
| Booking Holdings Inc. ($BKNG) | 2.0% | 2.3% | 3.0% | 2.4% | 4.2% |
| Stitch Fix, Inc. ($SFIX) | 2.1% | 1.8% | 1.4% | 2.0% | 1.8% |
| |
|---|
| Median (3 companies) | 2.1% | 2.0% | 3.0% | 2.7% | 4.2% |
|---|
| Farfetch Limited ($FTCH) | 2.5% | 3.3% | 3.5% | 3.9% | 1.6% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Amazon.com, Inc. ($AMZN) | 11.9% | 7.3% | 14.9% | 13.0% | 14.1% |
| Cango Inc. ($CANG) | - | 48.3% | 6.6% | 4.3% | 3.3% |
| Booking Holdings Inc. ($BKNG) | 17.3% | 23.2% | 27.3% | 32.0% | -3.7% |
| Stitch Fix, Inc. ($SFIX) | - | 32.2% | 20.5% | 6.6% | -10.7% |
| |
|---|
| Median (4 companies) | 14.6% | 27.7% | 17.7% | 9.8% | -0.2% |
|---|
| Farfetch Limited ($FTCH) | - | -35.3% | -22.7% | -27.7% | -124.7% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cango Inc. ($CANG) | 0.8x | -1.3x | - | 1.8x | - |
| Amazon.com, Inc. ($AMZN) | 0.1x | 1.5x | 0.6x | 1.0x | 1.1x |
| Booking Holdings Inc. ($BKNG) | 1.6x | 1.4x | 1.0x | 0.5x | 104.1x |
| Stitch Fix, Inc. ($SFIX) | -1.3x | -2.8x | -5.6x | -4.5x | - |
| |
|---|
| Median (4 companies) | 0.4x | 0.0x | 0.6x | 0.8x | 52.6x |
|---|
